April 26, 2012; Sacramento, CA, USA; Sacramento Kings owners Phil Maloof, George Maloof, and Gavin Maloof sit court side during the second quarter against the Los Angeles Lakers at Power Balance Pavilion. Mandatory Credit: Kelley L Cox-USA TODAY Sports

Report: Maloofs Ignored the Rights of Minority Owners

NBC Sports has discovered documents that could prove to be major stumbling blocks for the Kings’ pending sale by the Maloofs to a Seattle-based investment group.

Their report cites a number of ownership documents signed in 2003, and here are some of the key points to note:

The minority owners retain their right of first refusal for 60 days after receiving the selling Partner’s written notice.

To backtrack, the Maloofs own 65 percent of the Kings, with the other 35 percent belonging to minority owners. According to this statement, the minority owners have a full 60 days use their right of first refusal following a Note of Transfer from the Maloofs, which hasn’t even been sent yet.

If the Maloofs sell their interest to the Hansen-Ballmer group for the reported $525 million and the minority owners do not take up the Right of First Refusal, Hansen and Ballmer would be required to purchase a proportional stake of the minority share as well.

What this means is that Hansen’s group would have to buy the entire team, not just 65 percent from the Maloofs. This means they will have to shell out the full $525 million.

So by announcing an agreement to sell the Kings, the Maloofs have clearly ignored the rights of their minority owners, who have the right to refuse the sale and step forward with a matching offer to buy the team.

Whether that happens or not is another thing, but will the NBA’s Board of Governors approve the sale of a team by owners who didn’t follow the rules?

The fight to keep the Kings in Sacramento is not close to over, folks.

Tags: Maloofs Sacramento Kings

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